The Asia-Pacific Hydropower market is expected to rise at a CAGR of more than 2.5% during 2020 - 2025. Factors such as increasing investments in hydropower plants and rising demand for renewable energy are likely to drive the market. However, the high initial cost of a hydropower project is expected to restraint the market.
- Large hydropower is the largest segment in 2019 and is expected to dominate the market in the forecast period. The region heavily depends on the use of large hydropower plants as many countries have a hilly geographical landscape, which acts as the optimal conditions for the large hydropower generation.
- The technological advancements in efficiency and decrease in the production cost of hydropower projects are expected to create ample opportunity for the market players in Asia-Pacific.
- India is expected to witness growth in the forecast period due to increasing investment in the sector and growing demand for energy in the country.
Key Market Trends
Large Hydropower Segment to Dominate the Market
- Many countries in the region seek to address energy poverty and increase access to reliable, affordable, and cleaner electricity through the means of hydropower in the region. This is the case in Pakistan, Nepal, and Tajikistan, where hydropower's immense potential has barely been tapped
- In China, significant construction projects include the 10,200 MW Wudongde project and the 16,000 MW Baihetan project, which are expected to be commissioned in 2021 and 2022. However, there have been some delays in the plans, and the projects may be completed later in the forecast period. Increasing investments are expected to aid the growth of the market.
- The largest project commissioned in 2019 was the 720 MW Mangdechu project in Bhutan. It is funded by the Indian government and is expected to supply energy to both Bhutan and India. The government of India is assisting Bhutan to build 10,000 MW of hydropower capacity, in the coming years, with concessional finance.
- Policymakers in the region are scaling-up renewable energy development. Over the past years, the region has led the world in renewable energy capacity installations. In 2019, there has been strong momentum for hybrid renewable energy projects as governments encourage the deployment of floating solar PV at hydropower facilities. This enables hydropower and solar power to work in synergy while also making good use of existing infrastructure. Further plans for cross-border interconnection will also help integrate a greater share of renewable energy into the power system, thereby aiding the market's growth.
- Large hydropower installed capacity increased in the Asia region, by 3.95% to 370.8 gigawatts, in 2018 from 356.7 gigawatts, in 2017. The installed capacity is expected to further increase in the forecast period due to further investments in the sector.
- Hence, the large hydropower is expected to grow significantly in the forecast period due to rising investments and new technological advances in the field.
India to Witness Significant Growth
- The installed hydropower capacity in the country increased by 0.3%, from 50,082 megawatt, in 2018 to 50,225 megawatt, in 2019. New hydro projects are being installed in the country, which is expected to boost the hydropower market.
- The Union Ministry of New and Renewable Energy, India, announced in 2019 that small hydropower programs are to be provided central financial assistance to both government and private sectors involved in developing hydro projects. New policies to aggravate small hydropower is expected to aid the growth of the market.
- With the increasing application of wind and solar in the coming years, India's government believes it needs a significant increase in power system flexibility to ensure grid stability and avoid power shortages. In 2019, the government declared that large hydropower would be considered officially a renewable energy source. This move is expected to enable new, large projects to benefit from the non-solar Renewable Purchase Obligation, which mandates that regional utilities must purchase a portion of their electricity from hydropower. It will also provide developers with greater access to green bond financing, thereby aiding the market's growth.
- Measures are being announced by the government to support the hydropower initiative include providing developers with flexibility in tariff determination, and grants for the flood moderation components of projects and enabling infrastructures, such as roads and bridges. These measures are expected to renew confidence in the sector, with more capacity either currently under construction or in the development pipeline.
- Hence, India is expected to witness significant growth in the Asia-Pacific hydropower market, due to substantial scale investments and advancements in technologies in the market.
The Asia-Pacific hydropower market is moderately consolidated. Some of the key players in this market include NTPC Ltd, Power Construction Corporation of China, Ltd, China Yangtze Power Co. Ltd, Tokyo Electric Power Company Holdings, Inc., NHPC Ltd.
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